8 Programme funding models (Q12, Q13, Q14, Q15, Q20)

8.1 Section 4 of the consultation paper sought views on the best
funding models to achieve the programme's strategic priorities and
to effectively deliver the outcomes which had been identified. It
described the current funding arrangements, identified some of the
challenges, and set out a range of possible changes to current
approaches. The possibilities highlighted in the consultation paper
were: the introduction of concept notes; a mechanism to leverage
additional funding; the creation of separate funding streams for
(a) institutional exchanges and (b) trade and investment, in
addition to the traditional aid project funding; and the
continuation of scholarships.

8.2 The questions related to programme funding models were wide
ranging, and covered both high level, strategic issues related to
the design of the overall programme as well as more operational
issues relating to the application process, the length of funding
cycles, the capacity for responding flexibly in between funding
rounds to fund innovative and creative initiatives and other
specific demands, and the requirements for monitoring and
evaluation. The questions are discussed in turn below.

8.3 Across all questions, respondents made a wide range of
comments and suggestions relating to more specific or operational
aspects of the running of the International Development Fund. These
types of comments have been gathered together, and are briefly
discussed and summarised in a final section of this chapter.

Best funding models (Q12)

8.4 The first question in this section (Q12) invited comments
about the best funding models for the main country programmes.

Question 12: Scottish Government is keen to deploy
the best funding models for its main country programmes, to suit
our strategic priorities, and effectively deliver outcomes. Please
share any views you have on the best models to achieve this
ambition.

8.5 The consultation document highlighted a range of challenges
with the current funding approach including: maintaining the
strategic direction of the programme, building longer term
partnerships, retaining the distinctiveness of the block grant
funding model, the lack of incentives for partner organisations
within consortia, the limited flexibility to respond to innovative
initiatives, and how best to enable support for institutional
technical assistance and skills sharing. The document suggested
that the Scottish Government was exploring an approach for the
future which relied less on challenge funding and more on block
grants for strategic programmes, combined with targeted competitive
tendering.

8.6 In their comments, respondents offered a general endorsement
of the Scottish Government's current approach to funding, together
with a range of suggestions for improvement. Views on alternative
funding models / systems were also offered by some respondents.
Each of these aspects is discussed in turn below.

Endorsement of the current approach to funding

8.7 On the whole, respondents expressed support for the Scottish
Government's current approach to funding. They thought the current
approach provides an appropriate mix of funding models and
mechanisms. In particular, respondents thought the current approach
strikes a reasonable balance between (i) funding established
partners while also allowing new partners to emerge, and (ii)
challenge fund model and block grant funding approaches.

8.8 The challenge fund model, in particular, was affirmed by
many. Respondents therefore on the whole tended to make suggestions
about improving and enhancing current approaches rather than
calling for more radical change.

Suggestions for improving the current approach to
funding

8.9 The main suggestions for improving the current approach are
set out below. Many of these points are discussed in more detail
later in this chapter.

Adopt a more flexible approach to the terms and
conditions for funding. Respondents raised some very
specific issues in relation to this point. Additional flexibility
was requested in relation to a wide range of the current terms
and conditions for funding including: exchange rate fluctuations
and inflation adjustments, moving funds between different budget
lines, increasing the range of allowable costs, adapting projects
in response to emerging circumstances, the definition of eligible
partners, and using money for capital costs. Respondents often
made the point that this kind of flexibility was offered by other
funders.

Allow for longer term projects and programmes.
There was a strong shared view that the kinds of changes being
looked for could not be achieved in a short timeframe, and that,
in order to properly embed change and reap the benefits of
projects, a longer funding period was required.

Introduce concept notes in relation to challenge
funding. There was widespread support for the suggestion
in the consultation paper of introducing concept notes. This was
thought to be an appropriate way to ensure that organisations did
not spend undue resources on developing projects and programmes
which did not align with Scottish Government interests.

Continue the Small Grants Programme (on an annual round
basis). The Small Grants Programme was seen to have many
strengths and to deliver value for money. It was particularly
good for enabling smaller organisations to develop the
organisational capacity and capability they required to make
successful applications for larger grants.

Develop ways of mobilising additional funds.
Respondents thought it should be possible to improve the leverage
of current programmes by encouraging collaborative bids or
increasing the range of options for partnership funding.

Provide additional support to small
NGOs and
charities. There was support - especially from small
NGOs and
charities - for additional help for these organisations in
accessing funds. It was suggested that more flexibility in
accessing funds by / for these organisations would be
appropriate.

8.10 Other suggestions for improvement included: incorporating
capacity building / training into all proposals; introducing an
innovation fund; getting applications assessed by an expert panel
(rather than by an agency); increasing the amount of face-to-face
contact between civil servants and project applicants; introducing
cash vouchers and / or transfers; having annual funding rounds;
giving (more) advance notice of funding rounds; providing grants
for evaluation; providing support to link with other organisations;
and responding more quickly to requests for changes to
projects.

8.11 Other organisations' approaches to funding were highlighted
as offering good models. In particular, respondents noted: Tropical
Health and Education Trust (
THET),
Department for International Development Programme Partnership
Arrangements (
DfID (
PPA)),
European Union, Educational Concerns for Haiti Organisation (
ECHO),
National Police Aid Convoys (
NPAC), and
United States Agency for International Development (
USAid)
(particularly the Global Development Alliance model).

Alternative funding models / systems

8.12 Respondents discussed a number of alternative funding
models as follows:

Matched funding: The consultation document
explained that a matched funding model was currently only
considered in relation to the Malawi Development Programme.
Respondents had divergent views about the desirability of
extending matched funding more widely. While some respondents
highlighted the strengths of this model, others highlighted
weaknesses. Matched funding could, it was argued, help with a
sense of shared ownership and could be used to 'weed out rogue
projects' which did not have local support; however it was also
thought that this model risked excluding countries where the need
was acute but matched funding was not available.

Payment by results (
PBR):
Respondents were aware that some funding organisations were
moving to - or had moved to - a 'payment by results' (
PBR) system. This
was not thought to be appropriate within the Scottish Government
context:
PBR systems were
seen as more relevant for larger programmes and were not seen as
appropriate where culture change was the aim.

Dual model system: Respondents suggested that a
'dual model system' which would involve one funding system for
government level projects and one funding system for civil
society organisations would be appropriate in recognition of the
fact that 'some development projects are better done by
governments'.

A 'single fund' model: It was suggested that a
single fund (as opposed to separate funds for different programme
strands) would be appropriate. This would be a single,
integrated, annual call using a (two-stage) concept note.

Other issues

8.13 A few respondents expressed a view that the (perceived)
trend towards ever larger grants was not desirable. These
respondents thought the diversity of stakeholders was a major
strength of the current funding approach, and they were concerned
that reducing the numbers of smaller grants would risk curtailing
this diversity.

Planned vs flexible funding (Qs 13, 14)

8.14 Two questions in this consultation invited comments about
how best to support both planned and flexible funding and what the
balance between the two types of funding should be.

Question 13: Scottish Government recognises that
flexible funding between funding rounds is often required to meet
specific demands. Please share any views you have on how Scottish
Government could best support both planned and flexible
spending.

Question 14: In order to focus its funding efforts
better, Scottish Government is inclined to adjust the proportions
of funding that are allocated to its (long term)
IDF
programme and to its flexible funded elements. Please share any
views you have on this.

8.15 The responses to these questions overlapped and so they
have been analysed together. There were two distinct aspects to the
responses as follows:

The importance of building flexible funding arrangements into
all projects and programmes

The possibilities for developing a funding mechanism (or
funding mechanisms) for a separate stream of 'flexible
funding'.

8.16 Some respondents - particularly those with more experience
of large programme funding - commented on both these aspects.
Smaller
NGOs were
more likely to focus on the first aspect only. Each of these
aspects is discussed further below.

8.17 Note that whilst the Scottish Government intended Question
13 to generate views in relation to the flexibility to fund
innovative and creative initiatives
between formal funding rounds, respondents more
often discussed ideas about introducing additional flexibility
within
already funded projects and programmes.

Flexible funding arrangements within funded projects and
programmes

8.18 Respondents often focused on the importance of building
funding flexibility in to all projects and programmes, however long
term or short term they were. It was thought that flexibility
within projects and programmes, and more flexible terms and
conditions for funding, were required to help deal with a rapidly
changing operating environment. Respondents wanted flexibility
to:

Respond to external circumstances including emergencies and
disasters (this might involve redirecting existing funds and / or
having a specific fund for emergencies)

Allow funds to be used to develop collaborations and
partnerships

Move funds between budget headings (while still maintaining
the overall objectives of the project or programme) and / or
between years

Allow organisations to more flexibly deploy underspends
(accrued for example because of exchange rate fluctuations)

Give every programme a 'contingency allocation'

Allow for the extension of time to complete projects /
programmes

Ensure that momentum is not lost at the end of a project and
to redirect any unspent funds to 'follow on' activities.

8.19 In general, respondents agreed that some flexible funding
was required in order to be able to respond rapidly to natural
disasters and humanitarian crises, and to provide immediate relief
for unforeseen events and circumstances. Respondents emphasised
that only 'tried and tested' partners should participate in the
delivery of emergency aid. It was also suggested that an
appropriate response to a humanitarian crisis or natural disaster
might be to allocate additional - flexible - funding to existing
projects or programmes working in relevant (geographic or thematic)
areas.

8.20 A few respondents noted the Government's manifesto
commitment to establishing a '£1m a year humanitarian
emergencies fund' as a welcome development. It was thought that
this would reduce the need for the Scottish Government to have
significant unplanned
IDF
expenditure between funding rounds. However, it was also noted that
flexible funding would still be required for non-humanitarian
emergencies.

Models, mechanisms and underpinning principles for flexible
funding

8.21 Respondents emphasised the need for transparency in
relation to the allocation of flexible funding. It was assumed by
some respondents that 'flexible' was synonymous with
'non-competitive' and they asked for scrutiny and rigour to be
applied equally to flexible and to competitively awarded
funding.

8.23 It was common for respondents to emphasise the importance
of focusing mainly on planned expenditure: respondents often elided
the idea of 'planned expenditure' or a 'planned programme' with a
'long-term programme'. There was a strong view across all groups
that spending on long-term programmes, typically perceived as more
than three years of funding, should be prioritised; these were seen
to be the programmes which were required to deliver long-term
change.

8.24 Respondents argued that planned expenditure could be
evaluated against intended objectives, and they thought that this
kind of evaluation was crucial. Respondents therefore argued that
any flexible funding stream would have to be situated within a
strategy that focused mainly on the long term.

8.25 Respondents did, however, also affirm the importance of
'flexible funding', a concept that was often elided with 'shorter
projects' or 'innovative projects' or 'pilot projects', as well as
covering funding for disasters and emergencies. Smaller
NGOs in
particular argued in favour of smaller / shorter / more flexible
funding to encourage a flow of new ideas and new players alongside
more established partners.

8.26 It was thought that any flexible funding should be
small-scale, relative to planned expenditure, and that setting the
amount available for flexible funding at a reasonably low level
would reduce the chance of strategic priorities being 'lost', help
minimise the risks of an underspend, and prevent too much money
being taken out of competitive funding.
[7] Those who favoured this approach suggested a figure between
10% and 20% of the
IDF.

Other points raised

8.27 One
NGO with
an Africa focus questioned whether the
IDF
should have any role at all in short-term disaster relief. This
respondent suggested that this kind of work was better done by
DfID,
Oxfam, or one of the other larger funding agencies. Another
organisation (classified as 'other') suggested that flexible
funding would not be required within the
IDF if
the Scottish Government joined up with
DfID in
relation to emergency response work.

8.28 Several respondents favoured extending the Small Grants
Programme beyond its initial phase, and it was suggested by some
that the small grants funding stream could be used for
innovation.

8.29 Other points made included that:

Flexible funding changes the role of
IDF
staff

Long-term project funding should include advocacy, education
and communication

Concentrating only on bigger projects risked losing the
community focus of the programme.

Longer term funding programmes (Q15)

8.30 The consultation paper set out the Scottish Government's
ambition to support longer term funded programmes across political
and funding periods. Question 15 asked for respondents views on
what would be required to support this ambition.

Question 15: Thinking further ahead, Scottish
Government would like to support longer term funded programmes
across political and funding periods. Please share any views and
ideas, or examples of good practice on what conditions and
arrangements would be required to support this ambition.

Support for longer term funding programmes

8.31 Respondents highlighted longer term funded projects and
programmes as key to improving current funding arrangements (see
paragraph 8.9 above). There was widespread - indeed almost
unanimous - support for the proposal for longer term programmes.
Individuals and organisations of all types thought that this would
represent an important improvement to current arrangements.

8.32 The main reasons which respondents gave for supporting
longer term programmes were that:

Partnerships of all kinds are necessary for delivering the
kind of change being sought. It takes time to establish these
partnerships, and longer timeframes are therefore required to
generate more productive working.

Reaching sustainability is often not possible within a
three-year timeframe. In particular, if institutional changes
require to be embedded or if changes need to operate at a range
of levels from governmental to grassroots, a longer timeframe to
grow infrastructure and policy support is necessary.

In a number of specific contexts (agriculture, the
environment, and renewable energy were mentioned), a three-year
funding cycle is unworkable.

8.33 Organisational respondents who had been involved in longer
term funded programmes (funded either by the Scottish Government or
some other funder) were very positive about the benefits that had
accrued from this longer funding commitment. Institutional changes
had become embedded, and change was therefore sustainable.

8.34 Respondents varied in their views on the most appropriate
length of funding cycle. Some simply expressed a preference for a
'longer' timeframe. Others were more specific and mentioned periods
including: 3 to 5 years; up to 5 years; a minimum of 5 years; 6 to
7 years; 10 years; 10 to 15 years. One respondent suggested that
the funding period should match the time period identified for the
Global Goals.

8.35 Respondents across all groups emphasised the importance of
adapting and enhancing monitoring, evaluation, review and learning
frameworks as well as extending the periods over which funding was
available. This was vital to ensure that longer term projects
remained appropriately aligned to the outcomes that had been
identified. Linked to this was the suggestion that funding should
be explicitly phased, staged or tapered, with a review at each
stage determining whether or not the next tranche of funding should
be released. (See also the discussion of monitoring and evaluation
at paragraphs 8.41 to 8.51 below.)

Examples of good practice in longer term funded
programmes

8.36 Respondents referred to a number of existing programmes
with longer term funding cycles which were thought to offer
positive examples to draw on. This included:
DfIDPPA;
Inspiring Scotland (which has a 10 year programme with a
three-yearly 'reset'); the
EU model (in which work
packages are designed by recipient countries); the Icelandic
Development Support Agency support in Malawi; the Gates Foundation
(for health programmes); the
ECHO
approach;
USAid;
EuropeAid. One
iNGO
referred to a number of models and to a report on this topic which
had recently been completed.
[8]

Conditions for success for longer term funded
programmes

8.37 Respondents offered a range of suggestions in relation to
conditions which would contribute to the success of longer term
funded programmes including:

Distributing the funding through reputable organisations
(with strong governance) and undertaking due diligence of local
partners

Setting up learning and best practice events, facilitated by
the Scottish Government or one of the network organisations

Encouraging funded projects to work with relevant
UK institutions

Gaining commitment from all political parties for a longer
term approach to ensure that programmes will not be derailed by
political interests.

Caveats and disadvantages in relation to longer term funded
programmes

8.38 Respondents affirmed the importance of funding projects of
all types - including short-term projects, and
projects requesting small amounts of funding. While this did not
necessarily contradict any ambition to develop longer term funding
programmes, respondents emphasised that not all
IDF funds
should be allocated to long-term programmes.

8.39 In addition, respondents identified a number of
disadvantages of moving (wholly) to longer term programme funding.
These included: a reduced pool of funded applicants; a risk of
reducing the opportunity for new and innovative work; a risk that
start dates might be delayed and / or any sense of urgency might be
lost.

8.40 Finally, one respondent said that it is not the job of
government to provide long-term funding for
NGOs.

Improving monitoring and evaluation (Q20)

8.41 Question 20 asked respondents about their views on how
monitoring and evaluation of programme investments and initiatives
could be improved.

Question 20: Scottish Government recognises that
evaluation of our investments and initiatives must inform better
targeting of our efforts. Please share any views on how we might
improve our monitoring and evaluation.

8.42 In their comments, respondents affirmed the importance of
monitoring and evaluation, and provided examples of existing
monitoring and evaluation frameworks which they thought were
helpful in this context (
e.g.THET,
DfID
Girls Education Challenge (
GEC)).

8.43 Comments about improvements to current practice focused on
the following, each of which are discussed further below:

The importance of longer term, more holistic and wider
evaluations in addition to individual project specific
arrangements

The development of more opportunities for learning and
sharing successes and challenges in relation to project
outcomes

An increased focus on intended project / programme outcomes
from the outset, together with an articulated theory of change to
guide monitoring and evaluation frameworks and the use of
templates across all projects

The importance of building capacity for monitoring and
evaluation within partner countries

The importance of adequate funding for monitoring and
evaluation.

Longer term evaluations

8.44 Respondents from all groups made the point that the impact
of particular projects and / or programmes may not be fully
realised until years after the project or programme had completed.
In addition, there are wider questions (
e.g. What types of approach
have been more and less successful? Has learning been taken up into
practice?) that would require a more holistic approach, and would
have to draw on evidence about both processes and outcomes
generated across a range of projects and programmes over a longer
period of time.

8.45 In general, respondents thought these longer term
evaluations could be undertaken by academic organisations, either
on their own or in partnership with those involved in project and
programme delivery. Crucially, these longer term evaluations were
required to be independent.

Opportunities for sharing the learning from monitoring and
evaluation

8.46 Respondents wished to see more opportunities for sharing
the learning from monitoring and evaluation. This could be done
partly through better sharing of regular monitoring and evaluation
reports, but was more often referred to in the context of meetings,
workshops, webinars and other types of learning events. Respondents
emphasised the importance of learning not just from projects which
had worked well, but also from those which had encountered
difficulties. The learning should be both about the approach to
monitoring and evaluation as well as about the outcomes which had
been achieved.

8.47 Respondents also suggested that there should be more
face-to-face contact with civil servants, throughout the life cycle
of projects. Respondents recognised that there was insufficient
capacity at the Scottish Government at present to achieve this, but
thought this would be helpful going forward.

Outcome-focused evaluations using a common
approach

8.48 Respondents thought that monitoring and evaluation could be
improved by adopting common approaches to (i) identifying outcomes;
(ii) identifying a theory of change; (iii) developing logic models
/ driver diagrams; and (iv) identifying baseline positions and
appropriate measures. In this context respondents emphasised the
importance of using both qualitative and quantitative
approaches.

8.49 This would help to focus more directly on defining the
outcomes for projects and programmes. Respondents thought that
organisations would benefit from having access to templates and
supportive materials, as well as individualised support in
developing the overall framework.

Building capacity for evaluation in partner
countries

8.50 Respondents highlighted the importance of undertaking both
the design and the implementation of monitoring and evaluation
approaches within the host countries; they contrasted this with an
approach where monitoring and evaluation was led solely from
Scotland. This would help to build capacity for monitoring and
evaluation in partner countries, which was thought to be an
important consideration.

Funding for monitoring and evaluation

8.51 Respondents wished to see adequate resources allocated for
monitoring and evaluation. One respondent suggested that the
current allocation of 5% should be increased to a minimum of
7%.

Other issues

8.52 Finally, it was suggested that the timeframe for the
submission of end-of-grant reports should be extended. This was
currently set for one month after project completion. An extension
to three months was though to represent a more realistic timeframe
for reports to be submitted.

Enhancing the operation of the international development
programme

8.53 The consultation paper and accompanying questions mainly
focused on strategic issues relating to the priorities, objectives
and overall design of the international development programme and
the funding models which might best support this work. Many
respondents, however, used their response to questions throughout
the consultation to comment on more operational aspects of
programme management and delivery as summarised here.

Use of programme funds

8.54 There was a wide range of suggestions for specific
activities that should be pursued and / or funded via the
programme. These included:

Initiatives and networking structures (including the
development of online resources) in Scotland and in partner
countries to support partnership working, capacity building,
knowledge exchange, civic involvement and sustainability

Training and support for Scottish
NGOs and
partner country organisations

Volunteering programmes

Encouragement of appropriate trade and business
practices

Projects to address specific research questions that are
relevant in both Scotland and a particular partner country

IT facilities
to assist with partnership building.

8.55 Other suggestions mentioned (usually by just one or two
respondents) were:

Changing from a donor-recipient model to a co-partner model
(where the funds are accessed mutually by all applicants)

Committing a small sum (up to 15% of the
IDF) to
an 'institutional strengthening fund'

Using small grants for capacity building - especially for
smaller organisations.

8.56 In addition, there was a clear view that individual
projects funded by the Scottish Government should be aligned with
the principles underpinning the programme as a whole;
i.e. they should support capacity
building, sustainability, equality of partnership, community
participation,
etc.

8.57 There were, though, varying views on the number and scale
of projects which should be funded. Some favoured focusing on a
smaller number of projects, including large-scale high profile
projects which might increase visibility; others favoured the
diversity achieved through multiple small projects.

Applying for funding

8.58 In terms of eligibility, some respondents thought that it
should be a requirement for lead applicants to be based in
Scotland; while others were keen to see the direct funding of
partner country
NGOs.

8.59 In terms of the application process, respondents called for
more scrutiny of applicants in terms of their financial standing,
experience, personnel, and current links. There was also a
suggestion that it should be easier for small community-based
organisations to apply funding.

Programme and project management

8.60 There were calls for a coherent programme of interlinked
projects that would maximise impact. Respondents emphasised the
importance of following good project and programme management
principles and of undertaking appropriate research, monitoring and
evaluation (at both programme, sector and project level).

8.61 They also emphasised the importance of having appropriately
knowledgeable and skilled Scottish Government staff involved in all
aspects of the programme, complemented by input and participation
from partner countries.